DISCONTINUED OPERATIONS

On September 18, 2017, we signed a definitive agreement to sell our subsidiary, United Life Insurance Company, to Kuvare for $280,000 in cash, subject to specified adjustments as set forth in the definitive agreement. As a result, our life insurance business (previously reported as a separate segment) has been considered held for sale and reported as discontinued operations and its financial position, results of operations and cash flows are separately reported separately for all periods presented, unless otherwise noted. The sale is expected to close in the first half of 2018, subject to customary conditions, including regulatory approval.

Subsequent to the close of the sale in the first half of 2018, UFG will provide services to Kuvare through a transition services agreement ("TSA"). The TSA will be put in place to ensure a seamless transfer of the business between UFG and Kuvare. The TSA includes, among other considerations, accounting management, human resources, legal and information technology services, from the closing date for up to 24 months.

The assets and liabilities associated with discontinued operations prior to the closing of the sale have been presented separately in our Consolidated Balance Sheets. The major assets and liability categories were as follows as of the dates indicated:



Discontinued Operations
Balance Sheets
(In Thousands, Except Share Data)	September 30, 2017		December 31, 2016
	(unaudited)
Assets
Investments
Fixed maturities
Held-to-maturity, at amortized cost (fair value $39 in 2017 and $49 in 2016)	$	38	$	48
Available-for-sale, at fair value (amortized cost $1,399,465 in 2017 and $1,429,270 in 2016)	1,426,991		1,444,840
Equity Securities available-for-sale, at fair value (cost $5,099 in 2017 and $8,510 in 2016)	22,616		24,046
Mortgage loans	3,504		3,706
Policy loans	5,770		5,366
Other long-term investments	16,299		15,870
	1,475,218		1,493,876
Cash and cash equivalents	30,751		21,659
Deferred policy acquisition costs	65,836		70,750
Other assets	21,041		19,333
Total assets held for sale	$	1,592,846	$	1,605,618
Liabilities
Future policy benefits and losses	$	1,324,029	$	1,350,503
Accrued expenses and other liabilities	39,708		39,720
Total liabilities held for sale	$	1,363,737	$	1,390,223

Summary operating results of discontinued operations were as follows for the periods indicated:



Discontinued Operations
Statements of Income
	Three Months Ended September 30,				Nine Months Ended September 30,
(In Thousands, Except Share Data)	2017		2016		2017		2016

Revenues
Net premiums earned	$	14,230	$	20,600	$	45,999	$	62,878
Investment income, net of investment expenses	12,354		12,663		37,230		38,404
Net realized investment gains	296		461		3,600		1,409
Other income	174		145		498		436
Total revenues	$	27,054	$	33,869	$	87,327	$	103,127

Benefits, Losses and Expenses
Losses and loss settlement expenses	$	10,506	$	7,252	$	30,679	$	23,527
Increase in liability for future policy benefits	5,481		14,091		19,341		42,645
Amortization of deferred policy acquisition costs	2,156		1,876		5,524		5,716
Other underwriting expenses	2,444		4,527		9,452		14,630
Interest on policyholders’ accounts	4,587		4,983		13,982		15,368
Total benefits, losses and expenses	$	25,174	$	32,729	$	78,978	$	101,886

Income from discontinued operations before income taxes	$	1,880	$	1,140	$	8,349	$	1,241
Federal income tax expense	662		400		2,930		415
Net income from discontinued operations	$	1,218	$	740	$	5,419	$	826
Earnings per common share from discontinued operations:
Basic	$	0.05	$	0.03	$	0.21	$	0.03
Diluted	0.05		0.03		0.21		0.03

The Company's Consolidated Statement of Cash Flows presents operating, investing and financing cash flows of the discontinued operations separately. The Company's cash management and financial management of both continued and discontinued operations is consolidated as a centralized corporate function in our Finance Department. Cash and cash equivalents of the discontinued operations at September 30, 2017 and December 31, 2016 were $30,751 and $21,659, respectively.